When budgets are tight -- and even when are they not -- tracking the efficiency and productivity of your marketing strategies is more important than ever. Squeezing the budget for greater efficiency while maintaining or improving productivity is the challenge for every business owner and marketing director. The key to achieving this is to balance these two sometimes conflicting objectives.

Measuring Marketing Success

The commonly used measure for marketing efficiency and productivity is the ratio is gross profits divided by marketing expenditures. The problem with this ratio is that many other factors also affect profitability. Demographic changes, economic fluctuations and even a competitor's marketing are external factors that can affect your marketing success. This metric also assumes that marketing is a homogeneous activity that does not vary year to year. Your marketing promotions do not all have uniform effectiveness. You cannot increase marketing by a certain amount and expect a proportional increase in profitability. If you use this ratio as a measure of marketing success, you must put it in context with other variables.

Targeting Your Marketing

When you create your marketing strategies, examine which customer segments give you the most business. If you know who generates the most revenue for your business, you can reduce or eliminate your marketing for the segments that generate the least. New promotions can be targeted at your most valuable customers to increase your marketing efficiency and productivity. Efficiency can also be improved by speeding up your decision-making process. When your agency presents a new promotion, if you can eliminate delays in accepting, modifying or rejecting it, then you can implement it more quickly -- and dump it more quickly if it is ineffective.

Efficiency Versus Productivity

You can improve your marketing efficiency without necessarily improving your productivity -- in fact, if you are too efficient, your marketing productivity may fall. In tight economic times, it might be tempting to save money by shifting to a less expensive agency. If the new agency cannot do as good a job as its predecessor, your marketing productivity is affected, an outcome you need to monitor carefully. You can also improve efficiency by shifting your advertising to less expensive media, dropping ads in prime time and placing them in daytime or late night. Moving your marketing emphasis to the Internet and social media can improve efficiency and quite probably your productivity, too.

Measuring the Results

Whether your marketing is in traditional media or online, determining a quantitative way to measure success is essential to determine productivity. Regardless of what your intuition or advertising agency tells you, you need an analytical approach to know if your marketing is on track. Consider a dashboard that can summarize responses, whether they are leads generated, ad clicks online or incoming calls to your call center. If you can, cross-reference them with the ads that prompted the customer into action. For online analysis, try Google Analytics. It provides information about who visits your website, what they see there and how often they return -- and it's free. Use that data to make your future marketing efforts more efficient and productive.

About the Author

Thomas Metcalf has worked as an economist, stockbroker and technology salesman. A writer since 1997, he has written a monthly column for "Life Association News," authored several books and contributed to national publications such as the History Channel's "HISTORY Magazine." Metcalf holds a master's degree in economics from Tufts University.